RESEARCH
BEQUANT Crypto&Coffee
The market staged a healthy rebound following somewhat lacklustre performance over the weekend, although the inability to break past $7,000 will leave the bulls somewhat concerned, especially given the looming Bitcoin block reward halving. Still, the market is known for its ability to surprise and given the rising mining difficulty expectation adjustment, which is due to take place in the next 6 days. This should give some comfort for the bulls. Technically, $6,500/ $6,600 zone will now be seen as the short-term support area. A break below $6,500 level will likely lead to another round of liquidations and send the price towards $6,100/ $6,200 area. For the bulls, a break below will be particularly painful as technically, there really isn’t much support until the $5,000 zone. The cautious tone is supported by the shift in the futures curve into backwardation, having traded in contango last week, while the options skew is also indicating bearish positioning, especially over 1-3m strikes. Given the focus on Ethereum and the transition to PoS, TokenAnalyst.io pointed out that fees paid to miners (ETH 26.1K) exceeded the uncle reward (ETH 20.4k) paid to miners in March 2020. (i.e. the fees paid by the users are now greater than the cost paid by the network to maintain a 15sec blocktime). Since Jan 2019, the fees paid by smart contract transactions are greater than fees paid by basic $ETH transactions. In Mar 2020 alone, the fees paid by smart contract transactions (ETH 23.4K) was 8.6 times that of fees paid by basic Eth transactions (ETH 2.7k).
In terms of news flow, the Financial Stability Board (FSB), which coordinates rules for the Group of 20 (G20) economies, has issued recommendations for regulating “global stablecoins” such as the Facebook-led Libra project. The recommendations seek to promote “consistent” and “effective” regulation of global stablecoins such as Facebook’s Libra. It is worth noting that the FSB’s recommendations are open for public feedback until July 15. The final recommendations, factoring in feedback, will be published in October 2020.
Elsewhere, The Financial Times reported Tuesday that Silicon Valley investment powerhouse Andreessen Horowitz (a16z) is seeking to raise $450 million for a second crypto-focused fund. Citing "two people briefed on the matter," the FT said that the a16z "could finalise the new fund in about a week but has not yet placed a hard cap on its size, one of the people said." As a reminder, the investment firm's first crypto-dedicated fund attracted $350 million in capital commitments in mid-2018.
A Chinese state-owned bank appears to have released a mobile test app that supports the People's Bank of China (PBOC)'s digital currency project. As per the report by The Block, issued by the Agricultural Bank of China, the app displays several features related to the new digital currency, including digital currency exchange, wallet management, transaction tracking, and connecting other wallets. The new app will likely be available via the four cities' local branches of the Agricultural Bank of China, including Shenzhen, Xiong'An, Chengdu, and Suzhou.
Finally, a new class-action lawsuit against DeFi giant the Maker Foundation alleges that the company misrepresented the risks investors in the ecosystem faced, leading to catastrophic losses of collateral on MakerDAO on March 12. The complaint, which was filed in the Northern District Court of California on April 14, accuses three entities affiliated with Maker of negligence and intentional misrepresentation before investors, or “collateralized debt position holders.”
